Developmental NGOs can function as innovation intermediaries by facilitating interactions between diverse actors like smallholder dairy farmers, researchers, private companies, and policymakers. As intermediaries, NGOs can help address institutional challenges to innovation by managing relationships and partnerships. Examples from India show that NGOs are effective intermediaries because they are locally embedded and can experiment with new linkages. Their role as intermediaries may help smallholders engage with changing markets and innovation networks. However, continued support is needed for organizations that can perform intermediation roles over the long term.

1. Development NGOs as innovation intermediaries: preliminary learnings from
study of intermediation processes in smallholder dairy innovation systems
Mona Dhamankar, India.1
Abstract
The paper looks at the role of innovation intermediaries in strengthening the capacity of dairy
innovation systems that enable smallholder producers to maintain their participation in dairy
value chains in a developing country context changing due to globalisation. Using examples of
NGO led livelihood initiatives in India, it outlines how developmental NGOs function as
intermediaries in practice, and discusses the factors that determine their effectiveness. The cases
highlight the significance of intermediation in addressing institutional dimensions that form the
core of innovation management processes. They suggest that developmental NGOs are
particularly effective as intermediaries because they are contextually embedded and enjoy the
freedom to experiment with options and to forge new and/or unconventional linkages. The paper
concludes with a wider discussion of the implications of this experience and the need for some
form of continued support for intermediation processes and intermediary organisations in
developing countries.
1. Introduction
This paper explores the existing and emerging role of innovation intermediaries in addressing the
institutional dimensions of innovation management processes. This refers to the need for a
neutral organisation to manage relationships and outcomes of the collaborative arrangements
and/or partnerships that take place among a diverse set of organisational actors. These actors
could be from the public or private sector, and might be oriented towards research, market and/or
development. Citing examples of NGO led dairy initiatives, the paper outlines how NGO
function as intermediaries in practice, negotiate working relationships, and discusses the factors
PhD researcher, Department of Communication and Innovation Studies, Wageningen University, Netherlands
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2. that determine their effectiveness. The paper concludes with a wider discussion of the
implications of this experience and particularly its implications for policy in developing
countries.
2. Innovation Intermediation: some definitional aspects
In recent times, the ‘innovation systems approach’ has provided the analytical lens to understand
the shift from the conventional, technology transfer in agriculture and technology development
(that was essentially linear, from research to extension to farmers) to a more complex and
dynamic process based approach concerned with how farmers and other stakeholders can
generate and use new knowledge and resources for innovative interventions (World Bank, 2006).
Smits (2002) refers to innovation as a successful combination of hardware, orgware and software
viewed from a societal and economic point of view2. Leeuwis (2004) emphasises that innovation
is not an isolated process, but results from coordinated effort and action in a network of
interdependent actors. While several studies have provided insights into the important role of
networks and building linkages among diverse actors for innovation to take place, they also point
out to how weak linkages and interactions between diverse actors at different levels continue to
constrain the innovation capacity of the system and consequently affect development of the
sector. In the understanding of innovation dynamics, esp. in agriculture, it is critical to know
which actors are involved, what the nature and quality of their interactions is, and what role they
play in making the innovation take place. In order to stimulate innovation, a good understanding
of the various functions within the innovation process is important (Hekkert et.al., 2007).
Likewise Leeuwis (2004) asserts that innovation hinges on the integration of ideas, knowledge
and creativity of the different actors, which implies that there is a need for deliberate efforts to
facilitate interaction among various actors whereby negotiation and learning for innovation
might take place. Such facilitation needs to be done with due understanding of the
unpredictability of innovation processes like knowledge exchange, transfer of technologies,
Hardware relates to the material equipment (mostly) involved and software concerns the knowledge in terms of manuals,
software, digital content, tacit knowledge involved in the innovation. Orgware refers to the organisational and institutional
conditions that influence the development of an invention into an innovation and the actual functioning of an innovation (Smits
865:2002).
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3. stimulating demand, identifying services and funding opportunities, and coordinating of
networks among others.
The concept of innovation intermediation originates from the need to understand networks and
the nature of collaboration and competition that takes place between actors in the networks
where typically one actor takes on the facilitator role. Winch and Courtney (2007) define an
innovation broker as ‘an organisation acting as a member of a network of actors that is focused
neither on the generation nor the implementation of innovations, but on enabling other
organizations to innovate. Howells (2006) defines an intermediary as ‘an organization or body
that acts as an agent or broker in any aspect of the innovation process between two or more
parties. Such intermediary activities include: helping to provide information about potential
collaborators; brokering a transaction between two or more parties; acting as a mediator, or go-
between; bodies or organisations that are already collaborating; and helping find advice, funding
and support for innovation outcomes of such collaborations’. He argues that, This definition is
an all encompassing umbrella concept that denotes a variety of actors who have been described
as third parties, intermediary firms, bridgers , brokers, information intermediaries and boundary
spanning organization and even knowledge intensive business services (KIBS) (Howell, 2006).
These actors could be either public or private.
So basically innovation intermediaries act as mediators. Their role is mainly scanning and
processing information, selecting appropriate partners for potential collaboration (scoping and
filtering), knowledge brokering, testing and validating technologies and/or institutional
arrangements (piloting). Many times these functions could go unrecognised and undervalued, but
there is lot of foresight required, diagnostic work required and independent advice and mentoring
on protecting intellectual property in order to carry out these functions. Some innovation
intermediation functions appear to be targeted at individual stakeholders while some have more
systemic focus. Systemic functions would include management of the network, stimulating
demand articulation, providing infrastructure for strategic decision-making, something that
would create new opportunities and dynamism to keep the network going. So in a way
innovation intermediation is hard to define, and there might not be anything like a “pure
innovation intermediary”. There might be an overlap between intermediation and KIBS.
Intermediaries are basically organisations that function in the midst of producers and users of
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4. knowledge. So they could either be producers of knowledge, or users of knowledge, or the
interface between producers and users of knowledge. This is not really linear, but if one looks at
the linear model of technology transfer, innovation intermediaries would be seen as facilitators of
technology transfer. From a systems perspective on innovation, this is not just transmitting
knowledge but is also re-engineering knowledge, and fostering several knowledge flows from
one entity to another, which is also part of knowledge services. Thus the roles are complex and
multiple.
While trying to understand the process of intermediation, it is important to see how
intermediaries navigate their position in facilitating interactions and linkages between the various
actors within the network. Their roles may range from gathering, controlling and disseminating
knowledge to facilitating dialogue, providing guidance, identifying resources and creating
opportunities for using the resources. (Howells 2006, Klerkx and Leeuwis 2008, Klerkx et al
2009, Leeuwis 2004). According to Winch and Courtney (2007), innovation intermediaries or
brokers could be organizations that both act in a liaison role between the sources of new ideas
and the users of those ideas in innovation networks, and are also set up specifically to perform
this broking role as their core function. The latter are likely to be systemic intermediaries who
are dedicated to facilitating the formation and maintenance of innovation networks as
independent third-party organizations. On the other hand, there are some organizations, like
development NGOs, research organisations that might be established to perform different roles
but assume intermediary functions only gradually. They might be unaware that they are acting as
intermediaries supporting innovation. Nonetheless it is expected that the types and roles of
intermediaries vary with contexts. Such intermediaries can be individuals or organizations whose
functions depend upon their own access to resources and connections within a particular context.
3. Innovation challenges facing the Indian dairy sector
The performance of the dairy sub-sector in India during the past three decades has been pretty
impressive. It has rapidly evolved and has attracted several new actors, esp. in the private sector
who have entered the market post liberalization. The first change took place in the early 70’s
with the launch of the Operation flood program, with smallholders voluntarily coming together
to form cooperatives. This was beneficial when the domestic markets were regulated. With the
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5. opening up of the Indian economy the private players, MNCs and Indian corporate entered the
dairy sector. Further by becoming a member of the WTO in 1995, and amending the MMPO in
2002, India made a commitment to remove the restrictions on trade in the dairy sub sector (Paul
Sharma, 2007). Smallholder dairy farming which supports the livelihoods of majority of rural
households, is poorly prepared for these changes that bring opportunities but with the risk of
being marginalized out of domestic markets. For smallholders to remain viable, they require
higher integration into present day knowledge intensive markets, and this requires dynamic
innovation capacities in order to respond to ongoing changes. There is need for smallholder
producers to innovate, therefore they require efficient, creative and credible intermediaries who
can provide them support to help them engage in competitive and very demanding markets.
Productivity enhancement is seen as one option to increase marketable surpluses of smallholders
if they have to improve their competitiveness in present day value chain. Milk production
depends on various factors such as composition of livestock population, productivity of animals,
availability of quality feed and fodder, healthcare services, breeding facilities, processing and
marketing facilities. Production has almost tripled during the last 20 years with a decline in the
number of low-yielding nondescript milch cattle while the population of crossbred milch cattle
exhibited a sharp increase, indicating farmers'preference for crossbreds for milk - this reconciles
the increase in milk production with lesser number of cows (Sharma and Singh, 2007).
Management practices, owing to diminishing common property resources and pastures, the
grazing of animals is on the decline and stall-feeding is on the rise. However there is enough and
more evidence indicating that transition from subsistence to a small-scale enterprise level
depends not only on increased marketable surpluses and access to better markets, but it also
exposes such producers and enterprises to rising competition in the global market-place, market
shocks, and changing consumer demands, standards, and norms in distant markets
(Dijkman,2009). Changes in markets necessitate presence of a responsive capacity in producers
and their enterprises to cope with and thrive within changing contexts and conditions.
Moreover as productivity improvement is largely linked to technological interventions, the
limitations of a linear transfer of technology (ToT) model– research to extension to farmer – is
now becoming apparent. There is a growing realisation that ttechnology development is only a
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6. relatively small component of the larger process of technology production, supply and use – i.e.
the entire innovation process where emphasis is placed on putting knowledge and technology
into use. Technical change often requires complementary changes in, for example, the
organisation of production or the marketing of products. As a result interaction between a diverse
set of players is usually required for innovation to take place. While innovation may involve
radical technical changes such as introduction of a new breed or processing equipment, it is
usually a series of incremental changes –tinkering, adaptation and creative imitation -- in
technology, organisation or strategy. Lastly, technology production and supply processes need to
adapt to the agricultural, market and livelihood conditions prevailing in specific contexts at
specific points. (Hall et.al, 2007). Hall (2007) emphasises that It is the institutional context of
technology development and promotion initiatives – i.e. the combinations of different
organisations, and the roles, routines and rule sets associated with them – that determine the
extent to which these wider processes operate effectively and thus whether innovation is enabled
or not. And if the needs of smallholder dairy farmers are to be addressed by innovation, specific
institutional and governance innovations are usually required. There is need for arrangements
that resemble networks of researchers, farmers, entrepreneurs, NGOs, funding agencies and other
organisations involved in the creation, diffusion, adaptation and use of knowledge, as well as in
providing other resources for innovation (Biggs, 1990; Engel, 1995; Hall et al. 2001).
All this points out to the need for developing innovation capacity, not of the individual actors but
of the entire system that is responsible for making this happen. In a systems sense, this capacity
is viewed as the behavior of the loose network of all innovation related-actors, and the
institutional and policy settings that shape their behavior and evolution (Hall et.al. 2010). It
further leads to several unanswered questions such as – how can small producers organize their
demands for knowledge, technology and organizational change. What mechanism will facilitate
their search for information? Who will decide who is to collaborate? Who will coordinate the
networks of interaction needed for innovation? Who will monitor the benefits? Which type of
organization (or individual) is most suited (and accepted by all) to facilitate linkages? How
should they play this role?
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7. Leeuwis (2004) emphasizes that innovation requires a balance between new technical practices
and alternative ways of organizing – markets, labour, benefit sharing. Thus innovation is a
successful combination of ‘hardware’ (i.e. new technologies, devices, practices), ‘software’ (i.e.
knowledge and modes of thinking), and ‘orgware’ (new/ different social institutions and ways of
organizing) (Klerkx et. al. 2009). In the context of developing countries, each with different
cultures of collaboration, there is need to enhance networking within innovation systems.
From an innovation systems perspective, several actors are seen as important to dairy
innovation. These include producers, entrepreneurs, the consultants, researchers, retailers,
consumers and policy makers. These actors come together in networks or coalitions, in different
configurations, and engage in processes of joint learning and negotiation to shape the
innovations. As indicated in innovation literature, being involved in such networks is the key to
innovation. In such configurations, knowledge generation is not limited to research
organisations, but each actor generates knowledge and contributes to innovation. Practice-
related knowledge can come from entrepreneurs, consultants, farmer producers, and market-
related information can come from suppliers, retailers and even consumers. Several additional
factors such as funding, legal aspects, policy, infrastructure and market development, play a key
role in these kinds of configurations that shape the innovation process. And here as traditional
intermediaries, NGOs play an important role. This role might have emerged either purposefully
or serendipitously but has several beneficial effects on innovation (Klerkx et.al 2009). Therefore
it is interesting to examine how they perform these roles- specially dealing with issues related to
neutrality and credibility (i.e. being perceived as representing specific interest groups or being in
competition with other actors). There are also issues related to the sustenance of the intermediary
functions over time, raising questions like who will support/ fund them, and/or how to directly
attribute benefits to their contribution to the innovation.
In the dairy sector, over the years, there have been changes in the knowledge infrastructure.
Earlier it was the exclusive domain of the public agricultural research system – the universities
and veterinary colleges, the Indian Council of Agricultural Research (ICAR) institutes covering
dairy and veterinary research, and government extension departments. Knowledge was
considered a public good and was provided by the state through its agriculture, animal
husbandry, dairy development and department of cooperatives. These were supported by non-
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8. government service providers that existed in the form of NGOs, private companies dealing with
specific commodities and inputs. Their role depended a lot on the local context. However in the
recent past, in the Indian dairy industry, the entry of the organised private sector in the dairy
industry and strategic alliances or partnerships that are bringing changes in milk production, has
led to the emergence of knowledge as a private good. This kind of knowledge then can then have
characteristics like excludability. If one has to pay for the knowledge then the poor, smaller
producers might not be able to afford access to such knowledge that is private and commercial,
and thus are likely to be excluded. This in a way is the second level of knowledge infrastructure.
The type of knowledge required is also changing. Earlier it was more related to the factors of
milk production –information required to enhance productivity such as feed, fodder, breed
improvement, healthcare etc. But now with the growing demand for a whole range of
differentiated products from milk, there is need for a new set of information- technical as well as
commercial (processing, quality control, handling, packaging, storage, transportation etc.) and
also needs a set of specialised services to cater to these new products and differentiated
information requirements . This has implications for the knowledge infrastructure.
These changes in the interface between the producers and the users of knowledge have
implications for the way actors interact in a network situation. For instance, on the demand side,
the changing structure of the sector makes new demands on the producers’ entrepreneurial skills.
They have to cope with restructured markets, they should be able to seek out more opportunities
and act in a more strategic manner. There is shift expected from a production oriented system to
a market oriented system, build more generic business skills. So besides technical information on
how to produce more milk, they also need to plan their production – how many animals should
they rear on the resources they have for the business to be viable, how to plan their breeding
cycles in order to maintain continuity in milk production, what kind of animals should they keep,
how to reduce the lean-flush ratios, shorten inter-calving period – all these are finer aspects of
making business related production plans. Farmers are expected to become entrepreneurs along
with being milk producers. They need to know where the information will be available, that will
support their business strategies, and supports the innovation they need. There is a need for the
smallholders to shift from being recipients/ poor beneficiaries of development programs where
they take whatever comes to them, free to being more proactive and organise themselves and go
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9. out and explore the market. Producer organisers could eventually also contract service providers
who could provide them with the latest research and market information. In the past there have
been market failures due to information asymmetries, therefore the competency of smallholders
was questioned. They faced constraints with regard to setting up innovation projects. Their
situation is akin to SMEs in the industrial sector where there is lack of awareness about
organisational deficiencies or strategic deficiencies. So when smallholders come together they
might inadequately poised to decide which legal format is more suitable for them to access
markets, to enhance their business, to maximise profits and so on. They have difficulties in
articulating their needs. They probably are strongly entrenched in existing traditional networks
and therefore it is very difficult for them to move from one network to another. This sometimes
hinders development of new ideas, new knowledge and stops new insights from coming in. As a
consequence, smallholders are ignorant about and/or do not have access to appropriate sources of
knowledge and information. This is compounded by other practical constraints like lack of time,
resources and funds for innovation. Thus there is range of constraints which affect innovation on
the demand side.
On the supply side, the traditional information providers also have several constraints and
challenges. With increased product differentiation and producer specialisation there would be
farmers who produce certain quality milk only for cheese production or produce cow milk with a
certain fat percentage that can be only used to make cow ghee which has a great demand. This
calls for customised services in order to respond to such a heterogeneous demand for knowledge
and information. This in a way is a shift from traditionally provided technical information to
generic business support services for enhanced market access. It is also seen that the people who
provide traditional extension services are not equipped to provide this support esp. on non-dairy
aspects. So there are either subject matter specialists who provide technical information or non-
dairy business experts who often are unable to relate to smallholder farmers. It is mostly left to
the farmers to integrate information from both sources. The traditional service providers like
research and extension departments, universities therefore need to be more “client-oriented” and
to work in a more demand-driven way rather than in a supply-driven service delivery mode.
However, they also lack the motivation and the incentives which come in the way of working in
a demand driven way. This therefore reduces their appeal with smallholders who start looking
towards other sources of information who might be NGOs, private processors, suppliers,
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10. magazines whom they trust more than public research institutions. This creates competition
between various sources and also the need for strategic alliances.
4. Case studies
The case studies presented below explore the intermediary domain, specifically looking at how
development NGOs and producer organisations, set up for different functions gradually take on
the role of facilitating multi-actor interactions, and how they position themselves in networks
supporting innovation processes and how they contribute to these processes. The case studies
also aim to understand innovation processes leading to enhanced innovation capacity that is
central to maintaining smallholder participation in dairy value chains. The innovation capacity
refers to the capacity of the innovation system to adapt, and involves reworking ideas, resources
and relations and links (Hall et.al.2011). It is not limited to the individual capacity of smallholder
farmers or their organisations alone, but also farm-level processes and it includes policy and
institutional environments.
4.1 Case study 1: A case of arranging intellectual property protection
This case illustrates the efforts of a development NGO – Sahjeevan - to forge partnerships
between a national research organisation, an agricultural university, a government line
department and a community based traditional buffalo breeders association to initiate a process
to register a local buffalo breed maintained by the community, thereby protecting their
intellectual property rights. The interactions that took place over a two-year period, among this
diverse group of actors, led to the first instance of a breed recognition application being
submitted and granted to traditional livestock-keepers in India.
Banni is a non-descript buffalo belonging to the Kutch region in Gujarat in Western India. The
Maldharis, traditional livestock keepers of the region play a major role in breeding, evolution
and conservation of the Banni buffalo, and have been rearing them as their main source of
livelihood for years. In 2009, the Banni Breeder’s Association3 consisting of Maldharis engaged
in selective breeding and natural mating, submitted an application for breed recognition jointly
with the Sardarkrushinagar Dantiwada Agricultural University and the department of Animal
The Banni Pashu Uchherak Maldhari Sangathan, Reg.No. F/1932/ Kutch, dtd. 11/08/2009; Society Reg.No.
Guj/1756/ Kutch, dtd. 11/08/2009
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11. Husbandry, Govt. of Gujarat. This is the first time that a community based organisation has
applied and been credited for registering a breed with the National Bureau of Animal Genetic
Research, Govt. of India. Prior to this scientists often confused Banni with Murrah buffaloes
even though the local experts maintained that it was different from Murrah. To resolve the issue,
Sahjeevan organised an animal fair and invited scientists to the area to assess the animals and the
Maldharis rearing practices for themselves. They were also accompanied by scientists of the
local agricultural university. When the scientists were convinced that it was a different breed,
they were willing to initiate the process of breed recognition. As the first step, it was decided to
jointly undertake an in-situ breed conservation project, funded by the department of AH,
Government of Gujarat.
As far as field level processes were concerned there was no standard procedure for how a
community could register a breed. Therefore Sahjeevan wrote to the National Bureau of Animal
Genetic Resources (NBAGR) asking for guidelines- NBAGR took time (6 months) to prepare
the guidelines in consultation with various scientist groups. It was decided that SDAU would be
take care of the technical aspects, whereas the Maldharis would be responsible for field
processes4. Sahjeevan helped the community form a group of expert local breeders from among
themselves to work closely with SDAU. While selecting elite animals, SDAU was of the view
that high yielding animals - producing more than 10 litres – would be the general criteria,
whereas the Maldharis expert group came out with 8-10 other parameters that characterised the
breed, such as texture of the coat, shape of the body, shape of the horn etc. knowing full well that
animals who possessed all these characteristics would be high yielders, but may not be the
highest. SDAU appointed enumerators for milk recording and data collection, but as the
community was motivated and keen on getting their breed recognised, they proactively collected
data on their own and provided it to the university.
The application consisted of two parts –i) breed description, and ii) application for registration.,
As the breed was traditionally prepared and maintained by the community, Sahjeevan insisted
that the breeders association would be the first applicant in the process, and the other
collaborating agencies would second the application. Sahjeevan assisted them in preparing the
4
Sahjeevan had earlier involved them in documenting traditional knowledge about animal breeding and had
presented a paper in a national ITK Conference in New Delhi.
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12. application in English. SDAU analysed the data collected in the field to confirm parameters such
as age at first calving, lactation length, lactation yield etc. Information for the first part came
from the findings of the in-situ project, and from other independent studies carried out by SDAU
in collaboration with NBAGR.
In the case of establishing common rights over the Banni grassland, Sahjeevan has been
instrumental in creating a platform for representatives of the Forest department (Central
government), Land revenue department (govt. of Gujarat), environmental activitists
(Kalpavirksha, Paryavaran mitra), enviro-legal defence cell (govt.of India) and several NGOs
working on common land rights issues to interact with and understand the issues of the
traditional livestock keepers of Banni. This opportunity for dialog is a critical input if common
rights of the community are to be restored.
In subsequent years, during the 4th Annual animal fair (November 2010) Banni’s Biocultural
Community Protocol (BCP) was released. An initiative coordinated by Sahjeevan between the
Breeders’ Association and Natural Justice, the BCP is essentially a declaration of rights for the
local livestock-keeping community. Drawing upon national and international law as well as
customary rights, the document is an assertion of the Maldharis’ right to protect their livelihoods
and the biodiversity of Banni. The Maldharis state plainly their request to be informed of and
involved in any government decision regarding the region’s biodiversity and affecting its
livelihoods. Moreover, the Maldharis call for a cessation of industrial activities and further
development in and around Banni.
Lessons from Sahjeevan
Sahjeevan brought together several actors relevant to the innovation process, e.g. consulting
NBAGR for guidelines/ standard procedures for breed recognition and providing them to the
breeders association – the latter would never have known of nor contacted NBAGR. Sahjeevan
motivated the traditional breeders to pursue the task of breed recognition. It also facilitated
convergence of agenda among the SDAU, AH department, NBAGR and the breeder’s
association and steered their actions towards a common goal.
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13. If it were not for Sahjeevan, the process would have been delayed and the credit would not have
gone to the community. Historically none of the livestock breeds registered to date have been
reared at government research organisation farms, and yet have been registered by universities
and government research stations. This unprecedented breeder association led Banni buffalo
registration thus was an important achievement for the community. As a consequence, the prices
of the animal have doubled and there is an increased demand for Banni buffalo semen for cross-
breeding across the country, which has proven beneficial to the community.
The case illustrates the emergence of new partnerships and the role of a development NGO-
Sahjeevan- in initiating institutional innovation and inclusiveness in a public sector domain that
has been clearly influenced by historical patterns and mutual apprehension. It also led to putting
in place, new guidelines and institutional policies to support community led breed recognition
processes. Sahjeevan was able to facilitate productive interactions between traditional breeders
and scientists, and thereby create opportunities for mutual learning. The scientists worked closely
with the traditional breeders to develop protocols and data collection to determine breed
characteristics.
4.2 Case study 2: Facilitating organisational innovation and institutional innovation in
order to respond favourably to market factors (GRAM)
It is widely acknowledged that access to adequate and timely financial services for all actors in value
chains is a key element for success. The key features of this case are the institutional arrangements
that evolved over time for mobilising finances to upscale business in order to sustain rural
women producers in a dairy value chain. The dairy that started as an income generation
enterprise of a micro-credit federation, eventually became the first all women milk producer
company in the country.
Most established dairies in Andhra Pradesh, India are cooperative dairies that have been able to
sustain because most of their capital investment for land and machinery came in the form of
interest free loans secured by the government under the Operation Flood program. However a
private dairy producer company like the Intideepam Mahila Dairy (IMD) in the Nizamabad
district of Andhra Pradesh, promoted by an all-women micro-credit federation, had to depend
upon commercial financial organisations to raise capital. The first step towards inclusion of
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14. smallholder women producers was to create access to credit. Credit created opportunities for the
poor women to acquire buffaloes. However they soon realised that access to credit does not
necessarily create livelihoods unless linkages for supporting infrastructure and services were also
created. This is where GRAM5, the NGO instrumental for promoting micro-finance and
livelihood programs in the area, stepped in and worked out a systematic strategy for mobilising
resources to arrange for that.
In 2005 the women’s microfinance federation6 started the dairy as an income generation
enterprise with an initial investment of Rs.35 lakhs7 of their own. This money was used to set up
the first Bulk Milk Cooling Unit (BMCU) in the area. GRAM contributed personnel to work
with the dairy for 10 months through their own development funds. When the BMCU became
viable it generated interest and confidence in the women producers as well as in the market,
about the dairy and it’s potential. The following year (end of 2006) they negotiated an interest
free in-kind loan for another BMCU from Vishakha Dairy, a large cooperative dairy in the
Andhra Pradesh. This was with the understanding that the milk collected would be supplied to
Vishakha Dairy. Based on the experience in 2 clusters, the dairy gained confidence to expand
their operations. With GRAM’s assistance they prepared a business plan with an outlay of Rs.
8.35 crores8 for 20 more BMCUs in two districts of Nizamabad and Adilabad to cover more
producers. In 2007, the federation approached Oikocredit9 commercial credit, and the Rabobank
foundation and Agriterra for capacity building funds. GRAM10 received and managed the
development funds. Around the same time GRAM also obtained funding from the Ford
Foundation for organizing milk producers and establishing transparent milk procurement and
marketing system – this core support to GRAM enabled the dairy to mobilise other resources.
Simultaneously, jointly with GRAM, the federation constituted a Dairy Working Group as a
GRAM Abhyudaya Mandali (GRAM) a not-for-profit organization established in1980, has been working towards
empowerment of the disenfranchised men and women including the physically challenged, in the drought prone Nizamabad and
Adilabad districts of A.P. In the past 15 years, GRAM has successfully promoted and nurtured thrift based self-help groups
(SHGs) that have graduated to self-reliant CBOs in the form of mandal level federations duly registered as Mutually Aided Thrift
and Credit Cooperative Societies (MACS)
6
Indur MACS Federation,
1 lakh rupees = 100,000 rupees
1 crore rupees = 100 lakh rupees
9
A private funding organisation providing credit/ working capital to the microfinance sector as well as to cooperatives, fair trade
organizations and small-to-medium enterprises (SMEs) in the developing world, with a special emphasis on rural areas and
women.
10
As the dairy producers organisation was not formally incorporated, GRAM used their FCRA (Foreign Contribution Regulation
Act) registration in order to receive foreign grants on behalf of the dairy.
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15. governance mechanism to oversee deployment and use of these resources, and appointed a CEO
accountable to the working group. The all-women producer company was formally registered in
2009. In 2010, GRAM assisted the producer company to prepare another business plan and
proposal to raise funds to expand dairy activities. Of the total requirement of Rs. 4.3 crores, the
company asked NABARD for deficit finance of Rs. 1.3 crores as loan, with the remaining to be
contributed from the dairy profits and grants to GRAM.
From a viability point of view, the expansion had implications for increasing the scale of
production. GRAM decided to apply the ‘self-help’ approach that has been successful in thrift
and credit programs, could be used for organising smallholders as commodity-based self-help
groups, to help them graduate from subsistence level to small enterprises in terms of scale and
capital. Farmers in the area produce multiple commodities such as half acre of cotton, one acre of
pulses and oilseeds, therefore instead of having single commodity cooperatives, GRAM came
out with an organisational innovation to create a multi-commodity company – the Telangana
agri-producer company - to help producers link to markets in as many ways as possible. For
instance GRAM got ITC paper mills to supply planting material for tree fodder crops as dual
purpose crops- the fodder is needed in a dry area like Adilabad district, and negotiated buy-back
arrangements for the wood with ITC for the paper mills. The agri-producer company thus
functions as a platform (mother company) with the much needed commercial orientation for
more and diverse actors to come together for serious engagement with small producers.
Lessons from the GRAM case
This is a case of the role of innovation intermediaries in linking rural entrepreneurs to financial
services. One of the striking features of the case is the consistent handholding support provided
by the NGO-GRAM to a producers company to forge linkages and partnerships primarily for
financial and technical resource mobilisation. With paucity of government grants and subsidies,
they resorted to raising funds from commercial financial organisations, the latter being very
different in culture and ways of working. Creating platforms for this seemingly dissimilar group
of organisations to come together for mutual benefit would not have been possible without
intermediation of GRAM. As an intermediary, GRAM was mainly involved in scanning the
environment for relevant financial organisations, convince them of the creditworthiness of the
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16. fledgling producer company, and support the dairy operations with their own staff and
development funds.
The GRAM case strongly suggests that for innovation intermediaries to be effective, they have to
be contextually embedded, requiring considerable experimentation and institutional adaptation.
Owing to their rapport and relationship with producers and their organisations, development
NGOs operate with considerable freedom to explore options and develop new linkages – this
might not be possible with government agencies or even private companies who might have
regulatory restrictions to be so. In the case, GRAM has acted on behalf of the women’s
microfinance federation and later the producer company while forging partnerships and linkages
for financial mobilisation. In this process the office bearers of both these community-based
organisations (CBOs) gained substantial exposure to procedures and working systems of
commercial finance as well as donor organisations. Subsequent transactions also indicate that the
CBOs developed the confidence and the skills to transact with these actors independently.
5. Discussion – Development NGOs as innovation intermediaries
In both the cases, to a large extent the intermediation by the NGOs has helped sustain dairy
farming activities of the small producers and their organisations. The NGOs have had a
considerable stake in the innovation process by virtue of initiating the processes and being
instrumental in deciding the outcome of the process; nonetheless they have been able to
influence working practices at the producer level and also in some cases at the regional level –
e.g. in GRAM’s case, negotiating with NABARD to split funding in the form of both grant to the
NGO, and loan to the producer company. They have encouraged producers to build relationships
with relevant actors from the market and civil society domain, and in the process have facilitated
new and useful configurations that are central to innovation. By at times acting on behalf of the
network partners, the NGOs have reduced the uncertainty and risk of failure that could
discourage actors from coming together in the early stages of the innovation process. They acted
as a ‘translators’ between the different ‘worlds’, and performed mediating roles in case of
conflict about issues like the attribution of intellectual property rights in the Sahjeevan case,
and/or division and utilisation of funds in the GRAM case.
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17. The developmental NGOs in the cases seem adequately poised to overcome issues of neutrality
and have the credibility with not only producer groups but also donor agencies. Their goals and
objectives are aligned with most of the actors in a multi-actor configuration however their work
culture and orientation might differ. NGOs as development organisations are used to operating
independently and as such as perceived neutral -this is one of the main reasons of their
effectiveness and fosters collaboration in multi-actor settings. What they need is continued
support for their activities either through public or donor funded projects in order to play their
role effectively. The intermediary role blends with their traditional roles as development
facilitators, and therefore minimises role ambiguity. In some cases there presence might threaten
private commercial agencies and keep a check on vested interests if any.
5. Conclusions
This study reiterates the fact that NGOs are not specialist intermediary organisations but take up
the intermediation function as need emerge, and are mostly in addition to their traditional role as
development interventionists. While the latter might have a bearing on their neutrality and
credibility vis-à-vis other actors within the network, it works favourably in the context of
inclusion of smallholder producers in value chains. Moreover historically development NGOs
have been perceived as neutral as compared to private companies or even government
organisations and programs with specific mandates. Nonetheless these are functions that require
dedicated funding. Funds could be raised either from government/ public sector or from donors
or even from contributions from producer collectives. These observations have important
implications for governments in developing countries and donors as there is a risk of
intermediation functions being withdrawn with ending of projects (Klerkx et.al.2009). This
points to the need for concerted efforts towards building on the acquired intermediation skills
and social capital built for other development endeavours.
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